Ground Rents Income Fund PLC Reports FY 2025 Results: NAV Decline, Disposals, and Board Changes

GRIO FY2025: Valuation down, debt slashed, dividends still on hold

Ground Rents Income Fund (GRIO) has posted its audited results for the year to 30 September 2025. It was another year of grinding through industry headwinds, but there are some clear positives alongside the pain. Portfolio values fell again, yet disposals were achieved at decent levels, and the balance sheet is much sturdier.

If you want the full detail, the Annual Report is available at schro.link/grioar25 and on the Company website at groundrentsincomefund.com.

Key numbers investors should know

Portfolio valuation	£56.2 million
Like-for-like movement year-on-year	-£5.6 million (-9.0%)
Net Asset Value (NAV)	£52.2 million
NAV per share	54.5 pence per share
Prior year NAV / NAV per share	£56.5 million / 59.0 pence per share
Asset sales completed (in-year and post year-end)	£10.0 million
Bank loan reduced from / to	£19.5 million to £8.2 million
Loan facility margin (over SONIA)	Cut from 2.75% to 2.50%
Loan maturity	Extended to January 2028
Earnings before revaluation loss	£1.6 million (stable year-on-year)

Quick jargon check: NAV is the value of assets minus liabilities. “pps” is pence per share. “Like-for-like” adjusts for assets sold, so it shows the underlying movement in the remaining portfolio. SONIA is the Sterling Overnight Index Average, the base for much UK floating-rate debt.

Valuation falls 9%, but disposals land marginally above book

On a like-for-like basis, the portfolio fell by £5.6 million to £56.2 million, a 9.0% decline. That’s the bad bit. The less bad bit is that GRIO completed £10.0 million of asset sales during and just after the year, and those disposals were “marginally above” the valuation at the start of the year. In other words, the book values continue to be broadly executable.

For a fund following a shareholder-approved realisation strategy (i.e. sell down and return), achieving exits close to or slightly above book matters. It supports future sale prices and helps defend NAV while the sector navigates leasehold reform and remediation complexities.

Deleveraging and refinancing: balance sheet risk keeps coming down

Debt reduction is the standout positive. The bank loan is down from £19.5 million to £8.2 million, helped by disposals and a decision to hold less cash. Less leverage means lower financial risk and less sensitivity to valuation swings.

Post year-end, GRIO also refinanced its facility, pushing maturity out to January 2028 and trimming the margin to 2.50% over SONIA from 2.75%. There are no early repayment penalties, which is exactly what you want when you’re selling assets – it preserves flexibility to pay down debt as you go without incurring extra costs.

NAV and earnings: modest drift down, underlying profitability steady

NAV slipped to £52.2 million (54.5 pps) from £56.5 million (59.0 pps). That reflects the valuation headwind, partly offset by the impact of deleveraging and operations. Importantly, earnings before revaluation loss were £1.6 million and “stable year-on-year”, which suggests cash generation held up despite elevated costs.

Dividends remain withheld. The reason is unchanged: the Auditor’s report carries a “Disclaimer of Opinion”. That is accounting shorthand for the auditor not being able to form an opinion on the financial statements. GRIO has not disclosed further detail on the specific areas of limitation in this RNS. Until that disclaimer is lifted, the Board is continuing to hold back distributions. For income investors, that is a clear negative, even if operationally the fund is cash-generative.

Leasehold and Freehold Reform: Judicial Review dismissed, appeal permission sought

The High Court has dismissed the industry Judicial Review of the Leasehold and Freehold Reform Act 2024. GRIO and peers have lodged a formal application seeking permission to appeal. A decision on that application is expected in early 2026.

Why it matters: reform creates uncertainty around ground rent values and investor protections, which feeds directly into valuations and buyer appetite. The possibility of an appeal introduces a potential future catalyst, but the timeline is not short. For now, this backdrop remains a headwind, as the Board makes clear.

Building safety remediation: fewer properties in scope, costs largely external

GRIO reports a reduction in properties with ongoing building safety remediation from 23 to 22. Five projects were completed, while four others saw new or additional requirements identified. Additional due diligence is being undertaken across the remaining in-scope assets to ensure appropriate assurance.

Crucially, related costs “continue to be substantially met by original developers and the Government”. Works are underway at nine properties. That external funding support is a positive for NAV protection and cash flow management, even if the process remains administratively heavy.

Board changes: new Chair, further succession to come

Barry Gilbertson has retired as Chair today, with Non-Executive Director Judith MacKenzie taking over. Two other Non-Executive Directors, Bill Holland and Katherine Innes Ker, will stand for re-election at the March 2026 AGM but have confirmed their intention to step down once replacements are appointed. An independent search firm is on the case.

Continuity matters during a realisation programme. The handover looks orderly, and the incoming Chair has signalled a review of how Board and Manager remuneration aligns with delivery of the strategy – a welcome line for shareholders focused on execution incentives.

My take: cautious progress, with the right moves on debt and flexibility

• Positives: meaningful debt reduction; improved loan terms and maturity; disposals achieved marginally above starting valuations; underlying earnings steady; remediation costs largely externally funded.
• Negatives: further portfolio valuation decline; NAV down; dividends still withheld due to the Auditor’s Disclaimer of Opinion; legislative uncertainty remains after the Judicial Review was dismissed.

In a tough niche, GRIO is doing the sensible things: sell at acceptable prices, cut debt quickly, keep financing flexible, and stay on top of remediation. The withheld dividend is the biggest drag on investor appeal. Resolution of the audit disclaimer would be a significant catalyst, but timing is not disclosed.

What to watch next

• Further disposals and pricing versus book values – are sales still holding up “marginally above” valuation?
• Debt paydown – scope to reduce the £8.2 million loan further under the penalty-free facility.
• Auditor position – any movement on the Disclaimer of Opinion and the Board’s stance on resuming dividends.
• Leasehold reform litigation – decision on permission to appeal in early 2026.
• Remediation progress – continued shrinkage of in-scope properties and confirmation that costs remain substantially met by developers and Government.

Bottom line

GRIO’s FY2025 shows steady execution against a challenging backdrop. NAV is lower, but leverage is much reduced and the financing package is now fit for a rolling realisation. If disposals continue to clear near book and the audit and regulatory clouds begin to thin, the path to optimising returns becomes clearer. Until then, it’s a case of grinding out progress and preserving value – something this update suggests the team is managing with discipline.